Friday, October 31, 2008, 10/31/2008 02:29:00 PM

Federal Judge Dismisses Invista's Trade Secrets Case Against DuPont, Rhodia

By Todd
Trade secrets claims are generally matters covered by state, not federal, law. State law matters are routinely heard in state court - except when there is a diversity of citizenship between the parties and the amount in controversy exceeds $75,000. In diversity cases, corporations are "citizens" of both their state of incorporation and where their principal place of business is located.

A judge has dismissed a lawsuit by Koch Industries Inc.'s Invista unit against DuPont Co. and France's Rhodia SA over claims they teamed up to steal Invista's proprietary technology for the production of a chemical used in the manufacture of nylon.

In an order dated Thursday, U.S. District Judge Barbara S. Jones in Manhattan dismissed the lawsuit, saying Invista "failed to assert a cognizable federal claim." However, the judge did grant Invista's request to file an amended complaint.

"Invista grounds its claims in state law, not in any substantive provision" of federal law, the judge said. The company failed to plead a valid claim "because it cannot invoke an independent basis for federal jurisdiction," the judge found. (Author's note: we bet that Invista and DuPont are both incorporated in Delaware - meaning that diversity would be destroyed by that mere fact alone.)

In August, Invista sued DuPont and Rhodia, alleging Rhodia was attempting to improperly obtain trade secrets related to Invista's proprietary, butadinene- based technology to produce adiponitrile, an intermediate chemical used in the manufacture of nylon.

Invista had claimed it bought the core technology as part of $4.1 billion sale of DuPont's fibers business in 2004.

The lawsuit claimed DuPont agreed to prohibitions that barred it from competing against Invista and from disclosing the technology to any third party as part of the transaction.

The complaint alleged DuPont had joined forces with Rhodia as Rhodia seeks to build an adiponitrile plant in Asia and compete unfairly against Invista.

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